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10 August 2012 - 8:30am | posted by | 0 comments

Empty13 - What WPP CEO Sir Martin Sorrell expects from 2013

Empty13 - What WPP CEO Sir Martin Sorrell expects from 2013Empty13 - What WPP CEO Sir Martin Sorrell expects from 2013

Asked to contribute his expectations for next year as part of the Empty13 industry conversation over what the marketing and communications industry will do next year, with no Olympic Games, Queen's Jubilee or any other major event for marketers to spend their budgets around, Sir Martin Sorrell, CEO of WPP, offers his views on what can be expected from the year ahead.

2013 will be a tougher year due to a lack of major, global events. It’s not a mini-quadrennial like 2014 or a maxi-quadrennial as 2016 will be. I don’t think the pattern of growth will change materially. Interestingly, though, the GDP forecast for next year is stronger than the GDP forecast for this year. REAL worldwide GDP is growing at about three per cent. If current trends continue, advertising should grow in money terms at five per cent and in real terms at three per cent this year. And we're seeing people forecast REAL GDP growth of more than three per cent next year, which is puzzling in the context of this conversation.

In many respects 2013 will be driven by new markets - the fast-growing markets that are outstripping Western Europe and the US. And new media will continue to grow faster than legacy media. We still overspend on legacy media, particularly on press. Our clients spend about 19 per cent of their budgets on press, while consumers are spending nine per cent of their time on press. The converse is also true. People spend about a third of their time on digital, mobile and internet, while we spend about 19 per cent of clients' budgets on them. Those two things have come more into line, however. Television is about right at about 43 per cent and radio and outdoor are also about right, with maybe a little discontinuity.

In 2014 we’ll have the mid-term US congressionals, which due to the Supreme Court's decisions will again, like 2012, not have the limitations that we’ve had historically. The mid-term congressionals will be influenced by the Super PACs too. We'll have the Winter Games in Sochi, which I am sure will be a magnificent event, boosting an already strong, faster growing market in Russia, and also impacting on Germany and Eastern European countries like Poland. Last but not least, we'll have the World Cup in Brazil, which will be a wonderful event, and will attract a lot of attention from our industry. People will start to gear themselves up next year, so that spending won't just happen in 2014, it will also run into 2013.

It’s not all doom and gloom but there are other issues around: the crisis in the Eurozone, still our biggest trading partner; the threat of an Israeli attack on Iranian nuclear installations; the general situation in the Middle East; the Chinese hard landing (although that looks unlikely). All of these things weigh heavily, but most important of all is the American budget deficit and trying to solve it after the US Presidential election. This all adds up to quite a difficult climate but, having said that, our clients want growth and they will find that in the areas and strategies I've talked about.

Meanwhile, Brand Britain has had a very big impact - motivationally, spiritually and emotionally. I do believe the Olympic Games will have a longer benefit than people have traditionally given them credit for - in terms on their legacy, their power to inspire and their impact on youth. But this benefit has got to carry through and there are difficult economic factors to deal with in the meantime. I would prefer to batten down the hatches a little until 2013 and be ready to come out of the traps going into 2014 and beyond.

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